This document provides an overview of employment law essentials from an HR perspective in the UAE. It covers topics such as legal business structures and licenses, employment contracts, termination of employment and gratuity payments, and employee relations matters. For licenses, it describes commercial, industrial and professional licenses. It also outlines partnership, sole ownership and visa regulations. For contracts, it discusses limited, unlimited and internal employment contracts as well as termination processes. It provides details on end of service gratuity calculations for limited and unlimited contracts. Finally, it offers guidance on handling performance management, grievances, discipline, sickness, and bullying in the workplace.

1. Employment Law
Essentials
’HR Practitioner
Perspective’
Saliha Latif
Head of HR

2. CONTENTS:
Legal Set-up UAE License
3
Employment Contracts
Termination of Employment & Gratuity
Employee Relations
Questions
9
13
25
39

3. LEGAL SET-UP UAE
• Licenses
• Partnership Ownership
• Sole Ownership
• Visa Regulations
• Fines

4. LICENSES
Commercial License
• Issued to a company that will engage in any
kind of trading activity
Industrial License
• Issued to a company that will engage in
manufacturing or any industrial activity
Professional License
• Issued to service providers, professionals,
artisans, and craftsmen

5. PARTNER OWNERSHIP
1. Public and Private Shareholding Companies
• Banking, insurance, and financial activities
• Must have chairman and majority of directors UAE
nationals
2. Joint Venture
• A contract agreement between a UAE party and a
foreign party for the engagement in a desired
business
3. Limited Liability Companies (LLC)
• 2 – 50+ employees

6. SOLE OWNERSHIP
•
•
FZCO start up or establish branch / representative
office
Example IT – Dubai Internet City, DMC
DIFC minimum capital requirement ranging from
AED 50,000 to AED 1,000,000 depending upon the
selected Free Zone
•
Or:
Can have company set-up and power of attorney
to state sole ownership with you and local –
sleeping/ silent partner
•

7. VISA REGULATIONS
• To work in the UAE, all employees must have
valid visa before commencing employment
• An employee must be medically fit to acquire
employment visa / residency visa
• All visa cost must be shouldered by the employer
• Emirates ID needs to be arranged through EIA
and paid by the employee
• Certain professions require attested documents
such as degree/ diploma

8. FINES – MINISTRY OF LABOUR
(MOL)
Description
Penalty / Fine
Labour card delays pre- 60 days
AED, 1,000
Mission Labour card (temporary assignees AED 100 daily
maximum 3 months)
Fake Emiratisation targets
AED 20,000
Incorrect information entered into wage
protection system (WPS)
AED 20,000
Delay of employee salary pre 60 days
AED 5,000 per employee
multiple workers AED 50,000
Fake signed receipts slips
AED 5,000
maximum limit multiple
workers AED 50,000
Poor Labour accommodation not in line
with MOL standards
AED 20,000
Mis-use of company visa and no salary for AED 20,000 (in cases where
two months
employee not working)

9. THE EMPLOYMENT CONTRACT:
• Limited
• Un-limited
• Internal
Limited VS Un-limited?

10. Limited Contract
•
•
•
•
•
Has commencement
•
and expiry date set
Term cannot exceed 4
years
•
Can be renewed on
mutual consent for a
similar or reduced
period
Employment will
terminate at end of
period
Penalty for both
•
parties if contract
terminated early
Unlimited Contract
Contract will state
commencement date but no
expiry
Contract will be considered
"unlimited" if verbally
confirmed or if it is not for a
specified period or it had
been for a specified period
and the parties continue to
act on terms & conditions
after expiry
Contract may be terminated
by mutual agreement
providing 30 days notice

11. Internal Employment Contract
•
A much more detailed internal contract (to
cover policies and procedures, code of
conduct, ethics benefits etc)

12. INTERNAL EMPLOYMENT
CONTRACT
Points to Cover:
Date, title, type of contract,
Compensation package & Benefits
Company conduct, ethical standards
Summary of key policies and procedures (or add
paragraph to refer to such)
• Non-Competition/ solicitation clause
• Termination covenants
• Role profile and other relevant documents can be
included as appendix
•
•
•
•

14. WHEN TO TERMINATE?
 Both can decide mutually to move ahead – in
writing providing notice
 Un-limited contract notice from either party
 Expiry of fixed term (limited) contract
 If probation extended and not satisfactory – not
exceeding six months
 Sickness, disciplinary or other employee relation
matters (following UAE Law and procedures)

15. TERMINATION OF LIMITED
CONTRACT
• Provide notice in advance to inform employee of
expiry – either extend or terminate
• If decide to terminate in advance must provide
notice and valid reason
• 3 months notice pay or remainder of contract
period to be paid (whichever lower)
• Employee entitled to gratuity
• If employee resigns before expiry, liable to pay
employer 45 days salary – no gratuity

16. TERMINATION OF UN- LIMITED
CONTRACT
In accordance with UAE Labour Law:
• 30 days notice must be provided in writing
• Notice can be waived if both agree or paid in lieu
• If employee has more than one year service
entitled to end of service gratuity
• Annual Leave until last day must be calculated in
settlement and any expenses

17. ARTICLE 120 GROSS
MISCONDUCT
• An employee can be terminated without notice if
an act of Gross Misconducted is committed
• No notice or gratuity
Examples:
 Fraud, theft, bribery or financial loss
 Drunk, physical assault, abusive
 Absent without legitimate reason
 Fails to adhere to management instructions
despite previous warnings

18. EMPLOYEE’s RIGHT
• Employees may terminate the employment
contact without notice in accordance with Article
121
• The employee will be entitled to compensation if
the termination of the contract had been for an
unjustified cause
• Court may award employee damages, against the
employer, not to exceed three months wages
• The compensation for damages awarded to the
employee for unreasonable dismissal, will be
without prejudice to the employee's entitlement
of gratuity and payments in lieu of notice, if
notice had not been provided

19. END OF SERVICE - GRATUITY
• Statutory right of employee after completing one
year service
• Calculated on last basic salary only
• Free zone and LLC Contracts differ in calculation

20. UN-LIMITED CONTRACT Gratuity
Resignation :
 1-3 years = entitled to one third of the
severance pay
 3-5 years = two thirds of the severance pay if
continuous service exceeds three years up to five
years
 5+ years = full severance pay
Termination:
• 21 days' wage for each of the first five years of
service
• 30 days’ wage for each additional year of service
provided severance pay should not exceed two
year's wage

21. UN-LIMITED CONTRACTGRATUITY
Resignation
Service range
Service
years
1
2
3
4
5
6 & up
Termination
Service range
< 1 and
<3
7
7
7
21
> 3 and
<5
>5
14
14
14
14
14
21
21
21
21
21
21
30
< 1 and
>3
21
21
21
21
>3
and
<5
21
21
21
21
21
21
>5
21
21
21
21
30
30

22. LIMITED CONTRACT GRATUITY
• 21 Days multiplied by the number of service years
• Same applies to most FZCO companies and both pay
21 days irrelevant of resignation of termination

23. REPATRIATION
• If employment contract terminated company
must provide one-way return air-fare
• If employee finds suitable work elsewhere then
repatriation cost not included and employee
should provide company new labour approval
(after visa cancelled)
• Applicable only if included in contract for
resignation –otherwise not applicable

24. LABOUR CLAIMS
• Employees can raise complaint with MOL who will
mediate between both parties
• If no amicable settlement then can be timely and
costly court case
• Company liable to pay court fees
• Written evidence will be considered
• Appoint Arabic speaking legal advocate

25. EMPLOYEE RELATIONS
Sickness
Performance management
Handling Grievance
Dealing with Bullying at
work
• Disciplinary
•
•
•
•

26. SICKNESS
• As per UAE Law employees entitled to 15 days
per year
• No sick pay during probation
• Create internal sickness policy and ensure all
employees are aware of such
• Two days absence request medical certificate
• Consistent absence /pattern – follow informal
route then formal, ensure confirmed in writing
• If no improvement's despite previous
adjustment's/ warnings issue notice to terminate

29. PERFORMANCE MANAGEMENT
• Job profile provided at onset, bi- yearly
performance reviews with clear measurable
targets (SMART)
• Hold regular 1:1 meetings
• Where feel employee not meeting target do not
wait until formal review hold discussion and look
at way forward together
• Hold two way- feedback
• Be clear what outcome is if performance does not
meet company objectives

30. PLAN
•
•
•
DEVELOP
•
•
•
Identify+ agree upon expectations
Clarify how results will be evaluated
Document Plan
PERFORMANCE
MANAGEMENT
Assess + Evaluate progress
On-going feedback
Talent Discussion
ASSESS
•
•
•
RECOGNIZE
•
•
Bi-annual performance review
Promotions/ Bonus
Assess + Evaluate progress
On-going feedback
Talent Discussion

31. PERFORMANCE MANAGEMENT
PROCESS
Performance
Plan
Performance
Support
Performance
Review
Performance
Recognition

32. HANDLING AN EMPLOYEE
GRIEVANCE
• If employee has concern first step to
resolve informally;
• At times may be of a serious nature or employee
may want to make formal grievance
• Companies should have written grievance
procedure explaining timescale and process
• Carry out formal investigation
• Witnesses should be interviewed (confidentially)
• Outcome / decision explained to employee
• Next steps/ action plan

33. BULLYING AT WORK?
Examples:
• Shouting/ belittling and making someone feel
unimportant/ disrespected
• Excessive monitoring/ constant criticizing / deliberate
over-load of work
• Regular undermining of a competent worker/ setting
them up to fail
• Denying someone’s training or promotion
opportunities
• Excluding someone from normal workplace/staff
conversations and making someone feel unwelcome

34. BULLYING AT WORK? CONT…
Employers are responsible for preventing bullying
and harassment
• Un-acceptable and can cause serious problems
for company
• Can lead to poor performance, loss of respect
for managers, high turnover, damage company
reputation
• Having anti-bullying and harassment policies
can help prevent problems

35. Informal Approach
Counseling
Mediation
Formal Approach

36. DISCIPLINARY
• Set clear disciplinary policy highlighting
procedure and process for any misconduct
• Try to nip matter in the bud – informal
process
• Where Misconduct arises investigate matters,
speak to potential witnesses confidentially
• Issue warning – oral, first or final dependant
on seriousness
• Retain on file for period of 6 -18 months

37. EXAMPLES OF MISCONDUCT
Oral
•
•
First Offence
Punctuality
First Warning
•
•
Where previously
been warned
verbally and
repeated error
Performance or
sickness
management
process –stage 1
Final Warning
•
•
•
Bringing the
employer into
serious dishonor
Act serious but
does not warrant
immediate
dismissal
Performance or
sickness
management
process –stage 2
Dismissal
•
•
•
•
•
Failure to Follow Management Instruction
Fighting resulting in
physical
violence/trauma
Deliberately
damaging company
property
Serious bullying or
harassment
Serious infringement
of health and safety
rules
Fraud or falsifying
work documents

38. BEST PRACTICE FOR HR
PROFESSIONALS
• Be a good listener
• Ask open questions
• Do not argue - present in persuasive manner rather than
argumentative one
• Make sure you understand all views – some people have
difficulty expressing themselves
• Treat all with dignity & respect – do not ridicule or
criticize
• Gather all facts
• Make a decision and explain to employee (you may want
to consult higher management before making decision)
• Thank employee / explain confidentiality aspect

39. Questions ?